Singtel earnings plunge 64% on writedowns

Singtel's full-year earnings have dropped 64% as a result of non-cash impairments and currency fluctuations. The regional southeast Asia group, however, reported strong underlying numbers, buoyed by higher contributions from regional affiliates.

Full-year revenue was 14.1 billion Singapore dollars (US$10.45 billion), down 3.4%, and EBITDA was 2.4% lower, weighed down by a 6% depreciation of the Australian dollar. But on a constant currency basis, both numbers would have been stable, the company said in a filing Thursday.

It had warned last month of SG$3.1 billion ($2.3 billion) in second-half impairments, the biggest of which was a SG$2 billion ($1.5 billion) writedown against Optus, whose value has been hit by a high-profile customer data breach and a network outage over the past 20 months.

Optus's fixed network business also incurred a SG$480 million ($356 million) impairment, while S$54 million ($40 million) was provisioned against the network outage.

Additionally, Singtel wrote down SG$340 million ($252 million) against its cyber security subsidiary and another SG$280 million ($208 million) against NCS Australia. It also recorded a SG$794 million ($589 million) exceptional gain from the sale of 0.8% of its stake in Indian telco Airtel.

Setting aside the impairments, the company boosted underlying net profit by 10% to SG$2.3 billion ($1.7 billion).

New growth plan

Pretax profit from regional affiliates grew 3% to SG$2.3 billion ($1.7 billion), with India giant Airtel raising its contribution by 9% and Thailand's AIS by 14%.

CEO Yuen Kuan Moon unveiled a new growth plan that aimed at extracting further synergies from its Singapore and Australian operations, with a focus on cost-cutting, product simplification and deployment of AI.

He said Singtel would build on its “reset” over the past three years, in which it restructured and made a series of strategic asset sales. It has identified IT services arm NCS as one growth engine, with plans to improve profitability by building global scale and investing in AI. The unit reported 4% higher revenue and 31% higher EBIT last year with SG$3 billion ($2.22 billion) in new contracts.

Digital Infraco, which contains its regional data center business Nxera, is expected to be another source of growth, increasing sales by 8% last year and currently doubling data center capacity to meet demand.

The company also hopes to turn its 5G and edge orchestration platform, Paragon, into a global service. It will explore integrating Nxera’s and Paragon’s capabilities into another potentially new growth area, GPU-as-a-Service.

Singtel's stock closed at SG$2.41 ($1.79) Thursday, up 0.42%. It is down 2% this year and 5% over the past 12 months.